Cover Story:  At the heart of this week’s cover package is a special report on the transformation of American finance. The Economist's global-business correspondent, Thomas Bennett, has investigated how innovative financial companies have supplanted banks atop Wall Street. We live in an age not just of behemoth banks, but of giant asset managers, hedge funds, private-equity firms and trading firms. They have channelled capital towards world-beating ideas, contributing to America’s economic and technological outperformance. As well as hailing this dynamism, our report warns against hubris—and lays out how this new era could spark the next financial crisis.
The leader explains that a toxic combination of uncertainty, institutional conflict, volatile asset prices, higher capital costs and economic weakness threatens this new-look financial system. The financial revolution is encountering the MAGA revolution, and Donald Trump is playing havoc with trade, upending America’s global commitments and prolonging the government’s borrowing binge. In doing so he is flirting with disaster. America’s financial system has long been dominant, but the world has never been as exposed to it. Everyone should worry about its fragility.